ILL TOOL WORKS (ITW)
 
Quote Price $55.52
Price change for today in $ 0.42
Price change for today in % 0.76
Open Price $55.33
Previous Close $55.10
Daily Range $54.94 - $55.72
52-Week Range $39.12 - $59.27
Volume 1,965,758
 
 
Brokerage Analyst Recommendations 
17 Brokerage Firms Covering ITW
 
   
Strong Buy
9 		Buy
0 		Hold
7		 Sell
0		 Strong Sell
1
Average Broker Recommendation (ABR):2.02 
 
Description
Illinois Tool Works, Inc. manufactures and markets a variety of productsand systems that provide specific, problem-solving solutions for a diversecustomer base worldwide. The company's business units are divided into six segments: Engineered Products-North America; Engineered Products-International; Specialty Systems-North America; Specialty Systems-International; Consumer Products; and Leasing and Investments.
 
3600 WEST LAKE AVE
GLENVIEW, IL
60026-1215, USA
Phone: 8476574106
Fax: 847-657-4261
Web: http://www.itwinc.com
 Industry:MACH-GENL INDL
Sector: Industrial Products
Fiscal Year End:December
Last Reported Quarter:03/31/12
Next EPS Date:07/24/12
 
Capital Structure Solvency and Cash Flow

Balance Sheet

Exiting 3Q10, Illinois Tool Works’ cash and cash equivalents increased 30.3% sequentially to approximately $1,649.1 million compared with $1,265.2 million in the second quarter of 2010. This marked an improvement from a sequential fall of 10.7% in 2Q10. ITW paid approximately $151 million in cash for acquisitions completed in 3Q10.

Trade receivables were approximately $2,627.7 million, up compared with $2,582.7 million in 2Q10 and inventories were $1,544.7 million versus $1,458.2 million in 2Q10. Days sales outstanding in the quarter were 58.9 versus 57.0 in 2Q10. Inventory months increased to 1.8x from 1.7x in 2Q10.

Long-term debt, net of current portion increased to $2,737.4 million versus $2,724.3 million in 2Q10.

Return on invested capital (ROIC) was 16.6% compared with 17.0% in 2Q10. Debt to capital ratio increased 2% to 28% due to a 12% increase in total debt (short plus long-term debt). Management expects ROIC for FY10 to be within the 16% to 17% range while it would target to attain debt-to-capital ratio of 20% to 30% over time.

Few brokerage firms believe that with a large cash balance of $1.6 billion, ITW is well positioned to accelerate its acquisition activities in FY11.


Cash Flow

Net cash flow from operating activities was $483.9 million in 3Q10, down from $569.2 million in 3Q09, while capital spending increased to $72.2 million versus $53.0 million in the year-ago quarter.

Lower operating cash flow and higher capital expenditures led to a 20.2% y/y decline in free cash flow (net cash flow from operating activities minus capital expenditure) which totaled $411.8 million, compared with $516.2 million in 3Q09.

At its Investors’ Day, management provided free cash flow guidance for FY10 and anticipates that free cash flow would range within the $1.2-$1.3 billion range.

Dividend/Share Repurchase

During 3Q10, ITW repurchased approximately 8.1 million shares worth $350 million and distributed dividends totaling $156.1 million.

On October 13, 2010, ITW paid a quarterly dividend of $0.34 per common share to shareholders as of the close of business on September 30. The quarterly rate represents a 10.0% increase over $0.31 previously.


 




 
Last edited Thu Dec 30, 2010 05:20 AM
by SreelaBose (Zacks Investment Research)		6make a comment about Capital Structure Solvency and Cash Flow
 
Governance Social Responsibility and Employee Relations
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Acquisitions Divestitures and Joint Ventures

Acquisitions

Shell SOPUS: On December 7, 2010, ITW announced that it has signed an agreement to acquire Shell SOPUS Products' car care business for an undisclosed amount. The deal is subject to the approval of the regulatory authorities.

The assets acquired are expected to improve the vehicle owner’s windshield visibility, protecting and cleaning vehicles, and improving vehicle performance. It includes brands such as Rain-X®, Black Magic® and Gumout®, among others. The transaction is expected to consummate in 2011.

Panreac Group: On September 2, 2010, ITW announced the acquisition of Europe-based chemical company, Panreac Group. The terms of the transaction were not disclosed. Panreac Group serves particularly the laboratory, pharmaceutical, cosmetic and food industries.

The acquired company, founded in 1941, employs roughly 230 employees and will operate as a part of Illinois Tool’s Performance Polymers & Fluids. The acquisition will enable Illinois Tool to expand its operations in countries like Italy, France and Portugal.

Elro Group: On September 1, 2010, ITW announced the acquisition of Bremergarten-based developer and manufacturer of high quality thermal food service equipment, Elro Group. The terms of the transaction were not disclosed.

The acquired company, founded in 1934, employs roughly 200 employees and will operate as a separate business entity under Illinois Tool’s Food Equipment Group. The acquisition compliments Illinois Tool’s existing businesses in the growing cooking platform.

Sale of Meyercord Revenue

On September 8, 2010, ITW announced the sale of its wholly-owned subsidiary, Meyercord Revenue Inc. to SICPA Product Security LLC for an undisclosed amount. The business was stated to be unfit for the company’s long-term growth platform. SICPA Product Security is a private company specializing in security technology for currency and tax collection.

Meyercord Revenue was acquired by ITW in the late 1990s and produced state tax stamps on cigarettes. With annual sales of roughly $30 million, Meyercord Revenue provides 250 different tax stamps to 47 states and about 147 municipalities and Native American tribes.


Last edited Thu Dec 30, 2010 05:24 AM
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Recent and Upcoming Events

 
Major Risks

• Many customers are in cyclical businesses where demand varies along with economic and business cycle conditions.
• Demand for certain ITW products (like specialty fasteners and decorative laminates) is driven primarily by change in the absolute and relative levels of residential and non-residential building construction and remodeling activity, particularly in the US, Europe, and Australia, which is a matter of concern for the Company.
• Expanding manufacturing in lower-cost countries (e.g., China) can increase exposure to political and monetary instability, adverse changes in government regulation, and relatively weaker enforcement of intellectual property rights.

 


Last edited Thu Dec 30, 2010 05:26 AM
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